Liquidnet, an institutional investment network, has run its live events for a couple of years under Liquidnet Labs and this year buy-side traders were actually able to trial soon-to-launch technology.
Natasha Shamis, global head of product for Liquidnet was in Sydney for the lab event last week and said this year was building off the concepts that were thought of last year.
“This time around we actually have things that are in raw development that haven’t hit the market yet, but that are built up enough that the traders can try them out.
“We have a simulated environment where the traders can trade against each other using the technology and see how some of new products feel to them,” she said.
Ms Shamis said actionable insights was the goal of the institutional traders as many of them had a good grasp of analytics but now needed to tie that into their trading actions.
“The theme is actionable insight. It’s really the big focus for us right now and that’s from the trading perspective and from the portfolio manage perspective,” said Ms Shamis.
In many ways it was about creating a platform that was similar to Netflix where personalisation for the trader was at the forefront, she said.
“If you think of the Netflix model right where they recommend specific shows to you, but they also generate new content based on what they see people looking at. It’s not something that we readily have in the industry today, but I think that’s where it’s evolving, and we need to be at the forefront of that kind of personalization.
“I think that the way that our trading system will look for each trader is going to be personalized in the future, and a lot of that is all around the data collection and the normalization,” said Ms Shamis.
There was also a changing view on AI said Ms Shamis, whereas once AI was a replacement for traders, it is now seen as an augmentation.
“As traders start using these technologies, and actually getting better performance on the back of them, that’s when they’re realizing this is actually going to have a positive impact on my role because I can get better performance hopefully leading to better returns in the overall portfolio,” she said.
Globally, institutional traders were heading towards automation, it was not just specific regions said Ms Shamis and that was reflected in the lab event.
“It used to be that maybe there was different focuses in different regions, or one region was more behind the other in adopting some technology. But this time around, I find that it's really consistent with the global trends of automation, AI, machine learning,” she said.
AI and machine learning would keep going and unstructured data would become the biggest new players for traders said Ms Shamis.
“When you look at unstructured data and you can look at something like a research report, or you can look at something like an earnings call, and natural language processing will look at what do the words mean relative to each other. Is there an alpha signal in the way that CEO says something, or the way that a CEO ducked a question on the call?”
Ms Shamis said that new technology would enable buy-side traders to thrive and not just get by and insights and analytics were the way to get there.
“It’s like your managing just enough to get by, when your attention is spread across everything. But when you have insight and analytics that show you where to focus that's where you’re not just managing. You’re actually generating alpha,” she said.